CAPWatch Conference Update – Day 7 – Last Conference Day Drama

Day 7 – Last Conference Day Drama

I will send out the update of the bills after this, but I have to share a little background and then what happened last night at the legislature. In a nutshell, the majority of both the House and Senate want to see a statewide dispensary system. Conference committee has been a battle with both sides holding firm on the selection process. The House made several concessions to the Senate and still no movement. On Thursday, both Senate and House leadership (Senate President Donna Kim and House Majority Leader Scott Saiki) started showing up at conference. Then, on Friday, the Speaker attended. At the 4th conference committee meeting of the day on HB 321 (5:15 pm), Senate Chair Josh Green held firm on the first come, first served approach to applications for dispensaries. The House held firm to their merit-based selection process. When it was obvious that no agreement would be reached, House Chair Belatti deferred the bill (dead for this session but still alive in 2016), banged the gavel, and the meeting was adjourned (to a stunned audience). Then, hours later, something amazing happened – Green was removed from the committee, Espero became Chair and Ihara and Gabbard became new members! At one this morning, a press release came out saying that the conference committee would be reconvening onMONDAY AT NOON IN ROOM 229. Here’s the link to the notice followed by the story in Civil Beat.http://www.capitol.hawaii.gov/session2015/hearingnotices/CONF_PSM_05-04-15_C_.HTM

Hawaii lawmakers are looking to revive a bill to establish a medical marijuana dispensary system after conference committee negotiations collapsed Friday.

Update A conference committee made up of Senate and House negotiators plans to reconvene Monday at noon to consider House Bill 321, according to a Senate press release emailed at 1:21 a.m. Saturday.

After Sen. Josh Green refused to agree to a House draft of the bill, Senate leaders kicked him off of the panel and made Sen. Will Espero the new chair.

Senate President Donna Mercado Kim and House Speaker Joseph Souki sent a letter to all lawmakers Friday evening saying they decided to grant a waiver of negotiation and filing deadlines for the bill.

The deadline for completing negotiations was supposed to be 6 p.m.Friday. But under the waiver, the conference committee can meet between noon and 2 p.m.on Monday, with a conference committee report due by 5 p.m. that day.

The rule waiver comes after HB 321 had apparently died Friday when Green and Rep. Della Au Belatti couldn’t agree on the application process for potential dispensary owners.

Green rejected Belatti’s final draft of the bill, contending that it would invite organized crime into Hawaii. Belatti held her ground, saying that she was representing the view of House leadership.

A notice posted late Friday on the Legislature’s website revealed that Green had been discharged from the committee and Sen. Les Ihara was added to it. Espero, a big proponent of the bill and head of the Senate Public Safety Committee, took Green’s place as the lead negotiator.

Kim announced Friday night that the Senate might agree to the final draft presented by Belatti. In that version, Belatti capitulated to many of Green’s concerns about the structure of the dispensary system but not his preference for a first-come, first-served application process.

The late developments came as a relief to Rafael Kennedy, executive director of the Drug Policy Forum of Hawaii, who has been lobbying hard to pass the bill this year.

“We’re excited that there may still be an opportunity for this bill to be passed and get patients the access to medicine that they desperately need,” Kennedy said.

How the Bill Fell Apart

Kennedy began the week expecting approval, given the bill’s broad support in both the House and Senate. Medical marijuana has been legal in Hawaii for 15 years and there’s consensus among political leaders that it’s time to give patients a place to legally buy it if they can’t or don’t want to grow their own.

But when the conference committee led by Green and Belatti met Tuesday, it became clear that there was a huge gulf between the lawmakers’ visions for the program.

Green preferred a program where a single health care professional in each county would own all of the dispensaries and marijuana farms. He wanted eligible applicants selected on a first-come, first-served basis, and said his version took into account concerns from law enforcement.

Belatti favored more licensees and dispensaries over a longer timeline. She wanted the state Department of Health to choose licensees through a merit-based evaluation. Compared with Green’s, her version was more in line with the recommendations of a state task force report.

House and Senate leadership have spent the last few days trying to convince Green and Belatti to come to an agreement.

Even Gov. David Ige got involved. Green spoke with Ige’s chief of staff Wednesday, but declined to meet with the governor directly and said he wouldn’t revise the bill even if the governor planned to veto it.

“The governor doesn’t know half of what I know or what you know or Sen. Espero knows about this program,” Green told Belatti Friday. “He is a fantastic guy but he is not in the trenches.”

While Green resisted Ige’s overtures, the senator did compromise some, including agreeing to expand the definition of who could own the dispensaries so that it wouldn’t be limited to health care providers.

For her part, Belatti agreed to permit fewer licensees, and adopted Green’s requirement that a licensee own both the dispensaries and the production centers.

But 40 minutes before the deadline, neither would budge on the application process.

Green argued that Belatti’s proposed process was ambiguous and would open the door to favoritism and lawsuits.

“It is a process that would result in behind closed doors decision-making that has utterly no connection to right or wrong,” said the senator from the Big Island.

Despite her longtime support for establishing dispensaries, Belatti stood firm.

“That simply is the only and last point remaining,” she said. “The House cannot accept the Senate’s decision and I’m sorry but the bill is deferred.” She slammed her gavel and left the packed room.

Triage Began Almost Immediately

Minutes afterward, Espero met with Kim to try to figure out a way to revive the bill.

After a short floor session at 6:30 p.m., the Senate’s 24 Democrats went into caucus to discuss what to do.

Later, Belatti requested a recess during the House session and spoke quietly on the floor with House Speaker Joseph Souki, House Majority Leader Scott Saiki and Reps. Sylvia Luke and Karl Rhoads.

By 7:30 p.m. it became clear that the conference committee was planning to reconvene to resurrect the bill.

A press release sent around 8:15 p.m. announced that the bill would be heard at8:30 p.m. but Kim later announced that the measure would wait until Monday.

The political wrangling over the measure illustrates the importance of the bill that many lawmakers believed was a sure thing this session.

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And there’s more. The payday loan bill went down in flames. The industry has people who travel the country selling these loans to the most vulnerable in our communities. They also employed the good ole boy lobbyists (Red Morris, John Radcliff and Bruce Coppa). For a session that most described as kind of mild, all the excitement was saved until the end …and after! Civil Beat has a story on what happened at the conference committee on SB 737

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Effort to Cap Payday Loan Rates Dies After Maui Lawmakers Clash

Rep. Justin Woodson wanted to maintain the current maximum interest rate, while Sen. Rosalyn Baker was adamant about lowering it.

A bill to lower maximum payday loan interest rates died Friday after a fiery standoff between Sen. Rosalyn Baker and Rep. Justin Woodson, both of Maui County.

Baker’s proposal, Senate Bill 737, would have capped the annual percentage rate for payday loans at 36 percent, much lower than the current 459 percent.

Woodson countered with a different proposal Thursday that he said was intended to improve enforcement of the current law and maintain the existing interest rate cap.

On Friday morning, Baker wasn’t having it.

“Basically what your bill does is to put this kind of anti-consumer predatory lending thing in the statute in a different way than what it currently exists,” she said. “That’s not acceptable to the Senate.”

“The House position is 18 percent transactional fee, the Senate position is 36 percent APR,” Woodson said, noting that the law stipulates loans must be paid back within 30 days and he doesn’t think the APR is an appropriate way to measure their cost.

Baker pointed out that most borrowers take out multiple loans and remain indebted for months. A national study found that 80 percent of payday loans are rolled over or renewed within two weeks.

“But if the House wants to be known as the group that is anti-consumer protection and wants to be standing up for a predatory lending practice, so be it,” she said. “The Senate will not agree, and we can adjourn now. Is that your pleasure?”

“There’s a lot of misinformation …” Woodson started to say.

“Is that your pleasure?” Baker interrupted.

“We agree to disagree Senator,” he said.

“We’re adjourned.” She slammed the gavel.

Math Problems

Hawaii legalized the payday lending industry in 1999 through a statute called “deferred deposits.” The law permits lenders to charge a 15 percent fee on a loan of up to $600, and the money has to be paid back within a month.

Generally the loan lasts for a two-week period and in practice, lenders charge a total of 17.65 percent per loan. For example, one customer who took out a $500 loan at Money Mart paid $88.20 after two weeks.

To Woodson, that’s a reasonable fee that will let payday loan companies stay in business. He said after Friday’s hearing that he doesn’t think Baker understands the way the loans work.

“We have to conduct ourselves in a certain way in this building but I think how Sen Baker was acting was unbecoming,” he said. “What happened today was… potentially a burning of a bridge.”

But Baker thinks that it’s Woodson who is miscalculating how much the loans cost. His latest draft of the bill changed the law to allow a lender to charge $17.65 per $100 loan, which she believes would actually increase the legal interest rate.

Kim Harman, a community organizer who has been advocating for the 36 percent APR cap, agreed.

“Woodson either truly doesn’t understand how payday loans work or it feels like he was punishing borrowers for trying to improve them,” Herman said.

The representative from Kahului has been taking heat from advocates like Harman who see his position as defending a predatory industry at the expense of low-income residents.

Woodson said he believes his position, which is backed by key House leaders like Rep. Sylvia Luke, helps consumers while still ensuring that payday lenders can stay in business.

He disagreed that the annual percentage rate is the best way to measure the cost of the loan, even though a national study found that payday loan borrowers are indebted an average of 199 days each year.

‘Window Dressing’

Woodson’s proposal would have implemented a five-day cooling-off period between loans to discourage repeat borrowers.

Steve Levins, who leads the state Office of Consumer Protection, said studies from other states have shown that cooling-off periods are not effective in protecting debt traps.

For Levins, only the 36 percent APR would create meaningful reform. Although the state has laws in place banning companies from rolling over loans and giving out more than one loan to the same customer, the rules haven’t been effective in keeping consumers out of debt, he said.

“To just put window dressing on the current law and to make it appear that consumers were being protected… it’s not something that we can support,” Levins said.

The bill’s failure is good news for payday lending companies like Dollar Financial, which owns nine stores in the state, including Money Mart.

“Under existing law, gross income on a $100 transaction is $17.65. Under this proposal, it is $1.38,” the company stated in written testimony opposing Baker’s version of the bill. “No business can survive a 92.2% decrease in gross income. It doesn’t leave enough revenue to pay the light bill, much less employee payroll and benefits.”

Harman said she disappointed but not surprised the bill failed.

“There’s millions of dollars of profit to be made on poor people in Hawaii so of course there’s going to be a huge fight by the lenders and their lobbyists to protect those millions,” she said. “When the industry is able to pay so much money to fight it, you get confusing language and tricky numbers and it’s an uphill battle.”